Attractive features of the Islamic approach
The Islamic financial movement happens to be one of the unique features of twentieth century Islam. The fact that its rise coincided with the Muslim countries' coming out of colonial rule speaks volumes about its place in the Muslim psyche. It is much an expression of their distinct identity as any other symbol of independence, but there is a distinction no other symbol shares with it: It is meant for all. As Islam permeates deeper in contemporary Muslim societies, by accommodating what is new but useful and shedding what accompanied it for long but was not essential, the significance of an Islamic approach to such a mundane affair as finance dawns on all concerned. After all it was a moral approach to mundane affairs that was the essence of the Prophet's mission. Anyone who takes Islam seriously can hardly ignore the moral approach to money, banking and finance represented by this new phenomenon. That makes every Muslim a stakeholder in this venture. The same feature makes outsiders give a greater weight to the enterprise than its current size or volume would call for.

A return to ethics and morality is on the cards. Disillusionment with a moral approach to economics and exasperation at the excesses of secularmaterialisitic-hegemonic policies of politicians has created a new environment. The 'end of history' triumph list phase is over. People, including the intellectuals, are willing to listen. Is a moral approach to economic activity possible? Is it possible to define distributive justice in terms, which take into account not only the immediate and the actual, which is often affected by things transient and insignificant, but also in terms of things essential and durable, which relate to the core of the human situation? Is it desirable to manage money, banking and finance in total indifference to such problems as poverty, unemployment and increasing levels of anxiety? The fact that the Islamic financial movement claims to be based not on a fine stroke of human ingenuity but on divine guidance and prophetic insights makes it disarmingly simple. Alone in an age marked by its skepticism and uncertainties, the Islamic financial movement commits itself to a sacred text. To do so in matters economic leaves many gasping for their breath. But the fact that the text is not the handiwork of victors in a war or champions of a particular class, the fact that it is supra human, introduces an attraction no other school of thought can muster. For, whatever the difficulties faced in drawing guidance from a text revealed in the seventh century for life in the twenty first century, it could not possibly be seen promoting the interest of one group of people at the cost of the interest of others. The universal nature of the teachings of Islam relevant for finance, be it prohibition of Riba (interest) and Maysir (gambling) or the obligatory share of the poor in the wealth of the rich (Zakat), could hardly be doubted.

But did the movement really demonstrate in practice its ability to fulfill the promise of a moral handling of money, banking and finance that it bears by virtue of its being rooted in religion? That, of course is a different question, one which needs some research before it can be answered. The point I wish to make at this stage is, the very promise raises hopes no other approach has been able to raise.

Islamic finance in practice

Raising hopes in a disparate situation can take you along part of the way but not all the way. What could sustain Islamic banking and finance till now can hardly be expected to guarantee its continued progress in the future. It is one thing to capture a large chunk of the market in your home base, i.e. the Persian Gulf region; it is a different task to attract customers in the global market place. So, where do we go from here?

Comparative advantage

Pursue your comparative advantage, seems to be the right answer. I would list it as the following:

- Islamic finance forges a closer link between real economic activity that creates value and financial activity that facilitates it.

- Islamic finance does not allow creating new risks to profit thereby.

- Islamic finance is global and cosmopolitan. Having committed itself to a text accessible to all and Prophetic precedents available easily, Islamic finance is open to any innovations that are in congruence with its fundamentals. It is not a closed system. It has no regional, ethnic or class affiliations.

It may be argued that some of these advantages need state sponsorship to be pursued effectively. That is true, but before we take up the issue of state sponsorship let us note that the real sourced of strength for Islamic finance has always been private initiative. Once a framework for proper exercise of property rights and management of economic enterprise was in place, individuals were left free to organise business the way they like. When someone felt any need for clarification of a given text, or found oneself in a situation in which no available text offered guidance in his or her view, he or she approached the Prophet who gave a ruling. When the Prophet was no more, people turned to those who had been close to him. As time passed scholars collected these rulings and developed a whole body of jurisprudence on their basis. Rules relating to finance are also a part of the corpus so developed. But the remarkable thing is that there is nothing 'official' about this corpus. It was and remains till date the work of certain individuals endorsed by other individuals, however, large their numbers. Those actually involved in financial dealings followed the ruling of their choice as dictated by their conscience and their circumstances. As long as they operated within the framework defined by the texts they enjoyed a great amount of flexibility in their operations. The state did not legislate Islamic commercial law; hence the state could not enforce any particular rulings. The state came into picture when a dispute between trading parties brought them to a court of law, and the court took into consideration the particular rulings shared by the parties which were, therefore supposed to be the basis of their interaction.

Research conducted by Muhammad Asif

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